New Whistleblower Protections for Employees Under Defend Trade Secrets Act of 2016

Adam Abelson

On May 11, 2016, President Obama signed into law the Defend Trades Secrets Act of 2016 (DTSA). The law establishes broad new Federal jurisdiction over trade secrets, creating a new parallel track to allow individuals to bring trade secret cases to federal court as opposed to solely relying on state laws and state courts for these actions. While the new law does not preempt state law on trade secrets, the DTSA does establish new whistleblower protections that were not previously available to employees.

The DTSA provides for civil and criminal immunity for employees who disclose trade secrets if the disclosure was made in confidence to a government official, and if the information was revealed either to report or investigate a suspected violation of the law, or because it was made in a complaint or other document related to a legal proceeding. Furthermore, the DTSA allows an employee to reveal trade secrets if they have filed a lawsuit for retaliation against their employer, as long as the court documents containing the information are sealed, and the employee does not further disclose these trade secrets except pursuant to a court order.

Finally, the DTSA requires that employers provide notice of this new civil and criminal immunity to employees in any contract or agreement that contains use of trade secret or other confidential information. This obligation may be satisfied by the employer through a cross-reference to a policy document that explains the reporting policy to employees for suspected violation of trade secret law.